property assessment
Many Allegheny County property owners will get the opportunity to slash their real estate taxes. The open questions: By how much? And when?
A lawsuit pitting property owners and their advocates against the county and school districts appears to be winding down, bringing a change in how taxes are calculated after assessment appeals.
For owners of large commercial properties, appeals could bring big savings. For taxing bodies, especially school districts, it could mean budgetary pitfalls.
The impact is “alarming. Do the math,” said attorney Ira Weiss, whose firm serves as solicitor for the Pittsburgh Public Schools [PPS] and five other districts within Allegheny County. PPS relies on property taxes for around $189 million this year, covering more than one-quarter of its budget.
Depending on how it’s implemented, the impending change in the county’s property tax math could start cutting into revenues this year or next.
Said Weiss: “And there is no local government – school district or municipality – that can cope with that.”
The lawsuit’s lead plaintiff is Maddie Gioffre, a systems engineer living in Wilkinsburg, whose house’s assessment more than doubled after she moved to the borough and the school district appealed its value. Thirteen months after filing in the Allegheny County Court of Common Pleas, and following lengthy negotiations and orders by Judge Alan Hertzberg, many of its issues were resolved with a July 19 order he issued.
Understanding that order requires a sense of the basics of property taxation in Pennsylvania and Allegheny County. (If you already know what a Common Level Ratio is, click here to skip to the next section.)
Even as some lawmakers try to curb property taxes, the levy remains the single largest source of revenue for many of the state’s local governments.
Counties assign tax values to properties. Some counties revise all property values regularly, but Allegheny County hasn’t done so in a decade. Counties, school districts and municipalities decide on property tax rates, referred to as millage.
A property’s value (minus any applicable break for homeowners, farmers and low-income seniors) times the millage rate, divided by 1,000, determines the tax bill.
About Unbalanced: This year, PublicSource is exploring the effects of property taxes on people and communities a decade after Allegheny County’s last reassessment.
The owner, the school district or the municipality can appeal the value.
When someone appeals, the Property Assessment Appeals & Review Board [BPAAR] decides on the fair market value of the building and land, based on evidence of the recent sales of comparable properties. To get the property assessment, BPAAR then multiplies that market value by a factor called the Common Level Ratio [CLR].
The CLR is intended to reduce the tax bill to an amount comparable to those of similar properties. In Allegheny County’s case most assessments stem from 2012 market conditions. The CLR is calculated by the State Tax Equalization Board [STEB], based on a representative sample of recent market-rate property sales provided by the county.
More sales data could shave tax bills
STEB calculated a CLR of 81.1% for this year’s appeals, meaning that 2012 values were deemed to be around 81.1% of current values. Therefore, to be fair, a property with a market value of $100,000 would pay taxes based on $81,100.
The plaintiffs, represented by attorney John Silvestri, allege that the county provided STEB with a skewed sample of 5,357 sales, resulting in an inflated CLR. Hertzberg’s order last month compelled the county to give STEB a new sample including purchase prices of 10,114 properties.
Suley expects that the new data will result in a revised CLR in the “ballpark” of 64% once STEB gets the new data and finishes its calculations.
For an owner-occupied house in Pittsburgh with a value, determined via appeal, of $200,000, the total school, city and county tax bill with the faulty 81.1% CLR would be around $3,200. At a CLR of 64%, it would be around $2,400, according to the city’s property tax calculator. Suburban and commercial property owners would see different levels of savings because of varied tax rates and exemptions.
All owners who choose to appeal will have one thing in common, said Suley: “Everything moving forward will favor the property owners.”
Just maybe not yet.